The Government said that the fuller citations for the top awards at the New Year's and Birthday honours will remove any perception that “honours can be bought” with donations to political parties.

The new citations will be trialled from the Queen’s New Year’s honours list in January; the Government said in a response to a report on the honours system from the Public Administration Select Committee.

Ministers admitted that the “the Government shares the committee’s concern that some members of the public do not view the honours system as open or fair or believe that the honours can be bought”.

However, officials wanted to continue to be able to honour philanthropists and so would start from January publishing longer citations for new knights and dames to help “to dissipate some of these misconceptions”.

However, the Government also admitted that time-serving civil servants will continue to be honoured, despite concerns from the committee.

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There was a row in August when it emerged that a secret Whitehall quota system meant that three times as many civil servants as gold medal winning Olympic athletes were likely to get top honours in the New Year's Honours list.

The Government rejected a recommendation from the MPs that civil servants should be banned from receiving honours unless they could demonstrate “exceptional” service in the community or “above and beyond that required in employment”.

The Government said “there are no automatic honours for anyone”, apart from high court judges when they were appointed.

It said: “It is, though, right to continue to reward those whose achievements have been exceptional, whatever their field – and that might include those who make it to the very top of the Civil Service (though not many of today’s Permanent Secretaries hold Knight- or Damehoods).

“But in the vast majority of cases, the honours committees are looking for something extra.”

The committee said that it did not find the Government’s response “convincing” and officials should reconsider the MPs’ report.

Bernard Jenkin MP, the committee’s chairman, said: “It is clear to us that that there is strong concern among the public and demand for a clearer, more transparent system both for the award, and forfeiture, of honours.

“If honours are to retain any meaning and value they must be awarded to genuinely deserving recipients who have contributed to their communities above and beyond the norm, through a transparent system where people can see the value of the honour and what it was awarded for.

“The system as it currently operates cannot do that and we would ask the Government to reconsider our recommendations.”

The Government also rejected a proposal to remove the Prime Minister’s role in influencing how honours were awarded. It also did not agree the committee which stripped Fred Goodwin, the former Royal Bank of Scotland chief executive, of his knighthood this year should be overhauled.

A Cabinet office spokesman said: “Honours are awarded on merit to those who make outstanding contributions and not for simply doing the day job.

“Far from being the preserve of politicians, civil servants and celebrities the vast majority go to the unsung heroes who do remarkable work in their communities.

“In the last list just over 1200 people received awards of which 72 per cent were actively engaged in charitable or voluntary work. Awards are recommended by committees with independent chairs and a majority of independent members.”

The MPs also accused David Cameron of undermining public confidence in the honours system by awarding honours to five ministers sacked in his Cabinet reshuffle.

They said the move flew in the face of assurances given by the Government and represented a further "politicisation" of the system.

Former ministers James Paice, Edward Garnier, Nick Harvey and Gerald Howard were recommended by Mr Cameron for knighthoods after losing their jobs in the September reshuffle while Sir George Young - who has since returned to the Government as chief whip - was made a Companion of Honour.

The committee released a letter from its chairman Bernard Jenkin to the Prime Minister complaining that they were "perplexed and disillusioned" by his decision to make the awards.